To address the ongoing challenge of youth unemployment in the country, the South African government has expanded the Employment Tax Incentive (ETI) in an effort to encourage businesses to hire more young people in large numbers.
President Cyril Ramaphosa announced this on Thursday when he delivered the annual State of the Nation Address (SONA) at the City Hall in Cape Town.
The address took place on Thursday evening, 9 February 2023.
The Employment Tax Incentive is aimed at encouraging employers to hire young and less experienced work seekers. It reduces an employer’s cost of hiring young people through a cost-sharing mechanism with government, while leaving the wage the employee receives unaffected.
The employer can claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) tax payable by the amount of the total ETI calculated in respect of all qualifying employees.
Today, our economy is larger than it was before the pandemic. Between the third quarters of 2021 and 2022, around one and a half million new jobs were created in our economy.
The ETI was launched on 1 January 2014, but local businesses are yet to benefit from an almost decade long tax incentive program meant to put an end to youth unemployment; frustrations with the South African Revenue Services (SARS) has stalled the incentive's progress.
Although the ETI programme has been praised as a positive move despite youth unemployment still remaining at an all-time high, delays from SARS in processing the claims for the ETI may have reversed some of the advancements made over the previous nine years.
Government has developed and implemented other various initiatives, such as the Presidential Youth Employment Initiative, to alleviate some of the sky-high unemployment rate amongst the youth.
Last week, a new group of 150 000 teaching and general assistants started work, employed through the PYEI, at more than 22 000 schools, offering help and vital work experience to young people who were unemployed.
The data-free online platform, SAYouth.mobi, has been a key player in how the PYEI operates and takes applications, as well as providing unemployed members of the youth updates regarding job opportunities near them.
Ramaphosa announced that there are now more than 3 million users registered on the platform.
In addition, the President has announced that the Social Employment Fund is also recruiting 50,000 participants in its next phase to undertake work for the common good, while the revitalised National Youth Service will create a further 36 000 opportunities through non-profit and community-based organisations.
The aim of the Social Employment Fund is to support employment opportunities, counteracting job losses due to Covid-19, and creating an opportunity for growth and renewal.
The Presidential Employment Stimulus (PES) is also supporting people to earn their own living, first created and implemented as part of the Economic Reconstruction and Recovery Plan (ERRP) to further assist in combating the economic effects of the pandemic.
Launched in 2020 by Ramaphosa, the Presidential Employment Stimulus has delivered over one million opportunities to South Africans participating in the programme.
The Department of Home Affairs has also appointed the first group of 10 000 unemployed young people to digitize more than 340 million paper-based civic records.
President Ramaphosa emphasised that the most effective and sustainable way to build an economy is to equip people with the skills and know-how to drive it.
We have therefore been working to strengthen the link between the skills that we develop and the skills the workplace needs.
Youth unemployment in the country is a severe crisis, as the unemployment rate stood at 63.9% for those aged 15-24 and 42.1% for those aged 25-34 years, according to the Quarterly Labour Force Survey (QLFS) for the first quarter of 2022.
